Nestlé, Coca Cola put Nestea rollout on hold

Plans for a nationwide rollout of Nestea, a ready-to-drink (RTD) iced tea, have been put on hold by the Indian units of Coca Cola and Nestlé.

The two companies had come together to form Beverage Partners Worldwide, a global level alliance, with one of its stated aims being to crack the Indian non-aerated beverages market, which is expected to boom over the coming years.

The first product out the joint venture’s Indian stables was Nestea, which was test-marketed in the financial capital of Mumbai and was then to be rolled out pan-India in early 2011. But the product is not yet available outside of Mumbai.

Himanshu Manglik, communications manager at Nestlé India declined to comment on the delay in the wider product release.

However, Kamlesh Sharma, general manger, public affairs and communications, at Coca Cola India told FoodNavigator-Asia that the rollout is still in the test phase and the company will study the feedback before entering the next phase.

“Our strategy for introducing Nestea ready-to-drink tea products in India is to first conduct a test market to best learn what Indian consumers want and need. We then plan to apply our learning and adjust the consumer offering, if needed before we make any further launches of Nestea in country,”​ he added.

According to Sharma, the company introduced Nestea Lemon in an ‘on-the-go’ 400 ml PET bottle in select channels and outlets in Mumbai in November 2010, and it has “already seen evidence of a growing, loyal consumer base.”​

However, Sharma refused to quantify the market demand for Nestea, adding that the “product is still part of a test market exercise in India, [and so] we are not able to provide specific details on the consumer response.” ​

The Coca-Cola and Nestlé partnership for Nestea is not the sole such initiative in India.

Last year, PepsiCo and Tata Global Beverages also announced that were entering the functional beverages market together, even as PepsiCo had been in an edgy alliance with Indian FMCG giant Hindustan Unilever for Lipton ice tea.

A distributor for both aerated and non-aerated beverages in the city of Mumbai, who requested anonymity, told this publication that the response for canned or bottled iced tea products has generally been lukewarm in the city.

“I can't say much given my association with beverage companies, but I would just like to say that maybe they are over estimating the market for non-fizzy drinks. I think Indians still love their colas,”​ he said.

A report from the Associated Chambers of Commerce and Industry (ASSOCHAM) in India has said that Indian non-alcoholic beverages market would grow to US$2.3bn by 2015, up substantially from the current size of U$1.2bn.

The market is expected to grow at an annual rate of 20% year-on-year thanks to a rise in income levels and the concurrent change in lifestyle patterns, especially in the Indian middle class segment, the report said.